Over the past year, the US government has been trying to undermine Huawei’s ability to sell its fifth-generation or 5G technology. However, despite their campaign, Huawei’s revenue increased by more than 19% last year. This is obviously not the expectation of the U.S and it is now taking more drastic measures against Huawei.
Last Friday, the US Department of Commerce announced plans to revise the “Foreign Direct Product Rule”, which believes that when products are manufactured outside the United States but uses U.S. technology, they are U.S. “direct products” and are therefore subject to U.S. jurisdiction for export Regulations.
According to the rule change, Huawei will no longer be able to purchase chips from Taiwan’s TSMC. TSMC uses equipment from American companies like Applied Materials and Teradyne to manufacture chips for Huawei. In order to continue cooperation with Huawei, TSMC needs to seek permission from the US government. However, we all know that it will not get approval.
This is very bad for Huawei, but it will also cause a major blow to American companies. Last month, nine American Trade Associations wrote to Secretary of Commerce, Wilbur Ross, that the move would damage “the semiconductor industry, its global supply chain, and the broader technology sector.”
SEMI kicks against the U.S. decision on Huawei
According to SEMI (an association representing the semiconductor and electronics manufacturing supply chain), the US companies export $20 billion in chip manufacturing equipment each year. This plan against Huawei will “suppress the pace of further investment and innovation”. SEMI also noted that this move will encourage technology companies around the world to find alternatives to American components.
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Furthermore, changes to foreign direct product rules will trigger a significant loss of revenue for US companies. In March, an independent report by the Boston Consulting Group stated that “a strong semiconductor industry is critical to the global competitiveness and national security of the United States”. It predicts that if the United States continues to comply with current restrictions in the next three to five years, revenues from US companies will fall by 16%. If the US completely prohibits chip makers from selling to Chinese customers, revenues will fall by 37%.
Such a huge loss will force US companies to cut R & D expenditure and capital expenditure. This will therefore reduce the U.S.’s ability to innovate. According to BCG estimates, this loss will also force the company to cut 15,000 to 40,000 highly skilled direct jobs in the US semiconductor industry.
The US decision on Huawei may force chipmakers to make a hard decision
In the long run, US regulations may force chipmakers around the world to make choices. The first option will be to cut off all business links with Chinese technology companies. However, another option will be to stop using US equipment to make chips.
In view of the growth of China’s technology industry, chip manufacturers will most likely choose the latter. This will put American technology companies on a standstill. It will also undermine the global technology ecosystem, and potentially undermine the US leadership in the semiconductor industry. In summary, the U.S. may be shooting itself in the foot in the long run.
Diversity is the key. Consumer tech should NEVER be used as a weapon. Bring on Non-US and Non-US allied alternatives. I don’t care where, but we need an alternative viable ecosystem which is free or freer from politics. US is supposedly the land of the free… but all this shows is that its all rubbish and do not practice what they supposedly represent.
its not gonna hurt. China and USA will be enemy soon. so the earlier they cut the ties and decouple, the better it is. in the west or east asian, which one you rather prefer to use, Western standard which are know and famous for or some BIG company that hide under the shadow of communist and are not transparent in whatever they are doing.
true bro.. Global Times, CGTN, etc watchers are all here to do their propaganda on the tech world. USA and China will be enemy soon. its better now or never. Xi has crossed all the things Deng Xiao Ping has said to be friends to america. The New China communist under Xi is very aggressive and very ambitious. remember.. better hide your strenght and bide your time.
what has america bring themselves to this disaster. to rely on ambitious and aggressive communist countries to produce all their products. wow.. Democracy and Communism dictatorship will never mix. they are soon gonna be enemy soon. DECOUPLING has to be done as soon as possible to prevent future loss.
try googling HUAWEI NORTEL and study what has HUAWEI has done before. its an evil company with dirty laundry hanging out. its like an East India Company surviving the colonial era and still exist today, with lots of questionable pasts.
China needs to diversify and look for alternatives anyway. Relying on unreliable countries like the US is not the solution. Because the US obviously doesn’t want any other country who are not in its allies, to grow! This should also come as a lesson for other countries in Asia apart from those allied to the US. The US only keeps spreading rumors about China to trigger tensions between nations in Asia. China has faced and has come through many odds and has won many uphill wars in its journey. They will not be worried. This situation is good for new entities who want to establish themselves as suppliers of chips
All lies. These are lobbyists for Huawei and don’t give a damn about overall fairness. Remember, NOT ONE US SUPPLIER PARTS ARE IN THE NEW HUAWEI DEVICES, MORONS!
Look around clowns, in the US alone, 35+million jobs are lost due to this pandemic but you wants citizens to fear if one company, out of millions around the world, can save global economic disaster?
GTFOH!
what? please read what is communism first, before posting such funny messages
and of course, the countries where large businesses rule the economy and politics can’t be called democracies by definition
Sounds like Chinese propaganda.
It’s so nice that the Google feed is pushing Chinese propaganda at me got to love Google
Yeah how dare we not bring in some Chinese technology that has built-in spyware to spy on Americans that’s not freedom
Yeah how dare the United States spread rumours about China.
How dare the Americans bring up that the Chinese are the Muslims in labour camps and they released the Wuhan virus to the world mean while they lock down their country coronavirus didn’t spread to Beijing as a locked it down they only let flights from Wuhan go to the rest of the world none internally and they kept this all secret yeah how dare America
The sooner America Smackdowns China and gives it a good bloody nose the better for the rest of the world